The Truth About Jobs

Jobs, rather the lack of jobs is on everyone’s mind. Whether it is outsourcing, or increased productivity, everyone has a different take on the continuing downward pressure created by the Moore’s Law and the deflationary net. (Thomas Friedman has been doing some good stuff on this!) There are two different conflicting opinions as well at BusinessWeek and Business 2.0. But one thing is for certain, you cannot blame this whole thing on just outsourcing as politicians are trying to do.

But there are a couple of things which are true according to the most recent Bureau of Labor Statistics (BLS) report:

Many of us who live in the hot house called Silicon Valley believe that technology is the most affected are of the industry. That is simply not true. I recently got a research report from First Global, a UK based research firm. Here is what they had to say:

bq. We’d identified three industries as the problem industries, which have been primarily responsible for the jobless recovery this time around. These are the retail trade industry, the leisure and hospitality industry and the wholesale trade industry. During any normal year, these three industries together add more than 700,000 jobs in one full cycle, in both the seasonally adjusted and nonadjusted data. In the cycle that was recently completed, these industries have added merely 86,500 jobs.

What does this really mean? These three industries cannot function without on-site workers, i.e., these jobs cannot be outsourced. Something does not add up and both the Right & the Wrong political parties are missing a bigger problem. I will attempt at answering my own question, though I might be completely wrong. Since there are fewer jobs, people are spending less, traveling less and buying less. (Maybe!) Less they spend, the more companies are forced to cut corners and hire less. A virtuous cycle of doom? Saw this cycle play out in the telecom world, but will it in the real world? Since I am not an economist, I don’t know the answer and will appreciate the feedback.

bq. The export of thousands of jobs overseas since the 1970’s has more to do with specific United States economic policies, particularly free trade and deregulation, that have resulted domestically in corporations and wealthy individuals increasing their fortunes and the standard of living of American workers remaining stagnant. The effect is much like the recent economic “recovery.” The rising stock market indicates that someone is doing well, but the vast majority of ordinary people never see the money “trickle down.”

Update: BellSouth had cut 778 jobs in different parts of the company. One analyst says that “Industry forces are telling BLS that either some employees walk or most shareholders will.”